The Indian Education System & NEP 2020, Explained

The business of education in India refers to the vast ecosystem of schools, universities, private coaching centres, ed-tech platforms and policy bodies that together serve over 250 million students. It sits at the intersection of public funding, private investment and unmet demand, making it one of the largest and most complex education markets in the world.

• NEP 2020 replaces the 10+2 school structure with a 5+3+3+4 model aligned to child development research.
• The 10th board exam is not removed under NEP 2020; it remains, but assessment philosophy is being reformed.
• Education cess is a surcharge on income tax that funds government education and health programmes.
• The K. Kasturirangan Committee drafted the National Education Policy 2020.
• NEP 2020 aims to raise education spending to 6% of GDP, up from roughly 4.6% in 2021-22 (Economic Survey 2022-23).

What Is the Business of Education in India and How Does the System Work?

India’s education system is one of the largest in the world, covering over 1.5 million schools and more than 1,000 universities, according to the Ministry of Education’s Unified District Information System for Education Plus (UDISE+) 2022-23 report. The business of education in India runs on a three-tier structure: school education, higher secondary education, and higher education. The Central government sets national policy, while individual states control implementation, funding and curriculum delivery. This split creates enormous variation in quality between, say, Kerala and Bihar.

India’s school system has historically followed a 10+2 model, meaning ten years of school followed by two years of higher secondary. Students then move into undergraduate programmes of three to four years. The University Grants Commission (UGC) regulates degree-granting institutions, while the All India Council for Technical Education (AICTE) covers engineering and technology.

The Major Education Boards in India

India has multiple school boards, which is a source of genuine confusion for students and parents. The Central Board of Secondary Education (CBSE) is the most widely recognised, with over 27,000 affiliated schools as of 2023. The Indian Certificate of Secondary Education (ICSE) board is popular in urban private schools. Each state also has its own State Board, which typically sets easier benchmarks but carries less national portability.

The National Institute of Open Schooling (NIOS) serves students who cannot attend regular school, covering roughly 3.6 million active learners. Choice of board genuinely affects competitive exam eligibility, college admissions and even employer perception, which is why the NEP 2020 push toward a common curriculum framework matters so much.

The Right to Education Act

The Right of Children to Free and Compulsory Education Act, 2009 (RTE Act) guarantees free education to children aged 6 to 14. It mandates that private schools reserve 25% of seats for economically weaker sections. Enforcement has been uneven, but the law created a legal floor that did not exist before 2010.

NEP 2020 and the 5+3+3+4 Structure Explained

NEP 2020 is the policy document that replaces the 1986 National Policy on Education. The K. Kasturirangan Committee prepared it after consulting over 2.5 lakh gram panchayats, 6,600 blocks and 6,750 urban local bodies, according to the Ministry of Education. The scale of consultation was unprecedented.

The headline change is the shift from 10+2 to the 5+3+3+4 education system. Here is what that means in practice:

Stage	Age Group	Years	Focus
Foundational	3 to 8 years	5 years	Play-based learning, mother tongue, numeracy
Preparatory	8 to 11 years	3 years	Experiential learning, basic sciences and arts
Middle	11 to 14 years	3 years	Critical thinking, coding, vocational exposure
Secondary	14 to 18 years	4 years	Subject specialisation, board exams, multidisciplinary choice

The foundational stage now includes pre-primary years (ages 3-6), bringing early childhood care formally into the school structure for the first time. This is a significant shift because ASER 2022 data shows that only 42.8% of Class 5 students in rural India could read a Class 2 level text, a figure that has not changed much in a decade.

Is the 10th Board Exam Removed Under NEP 2020?

No. The 10th board exam is not removed under NEP 2020. What changes is the nature of assessment. NEP 2020 proposes that board exams test core competencies rather than rote recall, and that students can appear for board exams twice per year to reduce pressure. The Pariksha Pe Charcha initiative and the new PARAKH (Performance Assessment, Review and Analysis of Knowledge for Holistic Development) body are both steps toward this reformed assessment model.

How Will NEP 2020 Improve the Education Ecosystem of India?

NEP 2020 targets a Gross Enrolment Ratio (GER) in higher education of 50% by 2035, up from 27.3% in 2021-22 (AISHE Report 2021-22, Ministry of Education). It also introduces a four-year undergraduate programme with multiple entry and exit options, so a student who leaves after one year gets a certificate rather than nothing. That is a real structural fix for dropout-prone populations.

The policy pushes vocational education into mainstream schooling from Class 6 onwards, integrating internships and hands-on skills. For a country where millions of graduates struggle to find employment, this pivot toward employability is the most commercially significant change in the entire document.

What Is Education Cess and Where Does the Money Go?

Education cess is a surcharge levied on your income tax liability, not on your income directly. Currently, the Health and Education Cess stands at 4% of the total income tax payable, as per the Finance Act 2018 which merged the earlier 2% Education Cess and 1% Secondary and Higher Education Cess into a single 4% charge.

Before 2018, there were two separate levies: a 2% education cess and a 1% secondary and higher education cess, making the combined rate 3%. The merged 4% Health and Education Cess funds the Pradhan Mantri Swasthya Suraksha Yojana (health) and various Centrally Sponsored Schemes for school and higher education. The revenue goes into the Consolidated Fund of India and is then allocated through budget lines, not a dedicated education fund.

Why Does Education Cess Matter to You as a Taxpayer?

If your income tax liability is Rs 1,00,000, you pay an additional Rs 4,000 as Health and Education Cess, bringing your total tax to Rs 1,04,000. The cess applies after calculating tax at slab rates and before any rebate under Section 87A. It is a relatively small number for individual taxpayers but generates tens of thousands of crores annually at the national scale, money that is supposed to flow back into classrooms.

Why the Business of Education in India Is Still Struggling

The business of education in India has a fundamental tension: the government is the largest provider, but private institutions serve the aspirational middle class. According to ASER 2023, learning outcomes in government schools remain persistently low despite rising enrolment. Infrastructure, teacher quality and accountability gaps are the three recurring failure points across state after state.

Teacher vacancies are a structural crisis. The Department of School Education and Literacy reported over 10 lakh (1 million) teacher vacancies across government schools in 2022. You cannot fix learning outcomes without teachers in classrooms, and NEP 2020’s ambitious goals run straight into this staffing reality.

The Private Sector’s Role in the Business of Education

Private coaching, ed-tech platforms and private schools collectively form a massive parallel economy. The Indian private tutoring market was valued at approximately USD 5.7 billion in 2022 and is projected to grow significantly, per a Mordor Intelligence report. This shadow system exists because parents do not trust the formal system to deliver results, which is both a market opportunity and a clear indictment of public schooling.

That gap is exactly where platforms like 3University’s online courses operate, offering skills-first learning in areas like cybersecurity, ethical hacking and programming that the formal curriculum simply does not cover at scale. If you want to see what skills-based education looks like in practice, learn how 3University delivers skills-first education.

What NEP 2020 Gets Right and Where It Falls Short

NEP 2020 correctly identifies rote learning, rigid stream choices and poor early childhood education as root problems. Its multidisciplinary university model and flexible credit framework are genuinely progressive. The criticism is that implementation is left to states with wildly different capacities and political priorities. A policy is only as good as its execution, and so far the rollout has been patchy.

The 3University blog covers the intersection of education policy and career-relevant tech skills if you want to track how these changes affect your study and career choices.

Frequently Asked Questions

What is the business of education in India?

The business of education in India refers to the full ecosystem of schools, universities, private coaching centres, ed-tech companies and government programmes that serve over 250 million students. It is driven by public policy, private investment and a large skills gap between graduates and employer needs. NEP 2020 is the government’s most significant attempt to restructure this ecosystem in 34 years.

What is the new education policy 2022?

There is no separate NEP 2022. The policy in force is the National Education Policy 2020, approved by the Union Cabinet on 29 July 2020. Some people refer to NEP 2022 because implementation milestones and university-level changes, like the four-year undergraduate programme, began rolling out visibly in 2022 and 2023 under the renamed Ministry of Education.

Is the 10th board exam removed in the new education policy 2020?

No, the Class 10 board exam is not removed. NEP 2020 retains board exams but proposes reforming them to test higher-order thinking rather than memorisation. It suggests students should be able to sit board exams twice a year to reduce anxiety. The PARAKH national assessment body is being set up to standardise assessment frameworks across state boards.

Why is the Indian education system failing?

The core problems are poor learning outcomes despite rising enrolment, over one million teacher vacancies in government schools, rote-based assessment that does not measure real comprehension, and a curriculum that lags behind labour market needs. ASER 2023 data consistently shows that a large share of secondary students cannot perform basic reading or arithmetic tasks, pointing to system-wide failure in foundational learning.

Which committee prepared the new education policy 2020?

The National Education Policy 2020 was drafted by a committee chaired by Dr K. Kasturirangan, a former chairman of the Indian Space Research Organisation (ISRO). The committee was appointed in 2017 and submitted its draft in 2019. It consulted millions of stakeholders across villages, towns and cities before the policy was approved by the Union Cabinet in July 2020.

What is health and education cess in India?

Health and Education Cess is a 4% surcharge on your total income tax liability, introduced via the Finance Act 2018. It replaced the earlier 3% combined education cess. The revenue funds centrally sponsored education schemes and health programmes. It is calculated after your tax at slab rates and applies to all individual taxpayers, including those paying surcharge on higher incomes.

Last updated: July 2026. Reviewed by the 3University editorial team.